Chitosan is nature's second most abundant polymer after cellulose and forms the structural support in crustacean shell material and Basidomycete mushroom stalks. Chitosan is a known antimicrobial agent but, to date, was not examined as an antimicrobial agent in bread formulations for the prevention of mold or rope formation. The aim of this work was to investigate the effects of chitosan generated from prawn shell byproducts on the color, moisture, and texture and crumb formation of bread. A secondary aim of this work was to determine the antimicrobial effect of chitosan added to bread at a rate of 1% against the rope spoilage pathogen Bacillus cereus along with natural molds. The addition of chitosan to bread with a molecular mass of 124000 ± 10000 g/mol and 19% deacetylated was found to inhibit B. cereus growth and rope formation in bread when monitored over 3-5 days. Natural mold growth was also significantly delayed in bread made using chitosan substitution of flour at 1% compared to the control bread, where mold was observed growing on the bread surface after 72 h when bread was incubated at 30 °C.